U.S. tech companies face huge downsides if they comply to Hong Kong’s new security law on handing over user data

With China imposing its draconian security law and effectively annexing Hong Kong, U.S. technology companies which have a presence in the erstwhile semi-autonomous Chinese territory, are being forced for rethink and reshape their businesses following their suspension of processing government requests for user data, which is at best a stop-gap measure, as they weigh their options, said sources close to the industry.

Although Hong Kong is not a key market for U.S. tech firms including Twitter, Google and Facebook, they however use it as a perch to target deep-pocketed advertisers in mainland China, where many of their services are blocked by Beijing.

With China imposing its security law in Hong Kong, these U.S. tech companies have come into its cross hairs since authorities in Beijing can now demand that they hand over user data or censor content according to its laws, even when such content is posted from abroad.

“These companies have to totally reassess the liability of having a presence in Hong Kong,” said Charles Mok, a legislator who represents the technology industry in Hong Kong.

If the tech companies refuse to comply, Chinese authorities “could go after them and take them to court and fine them, or imprison their principals in Hong Kong”.

On Monday, Twitter, Google and Facebook said they have suspended processing government requests for user data in Hong Kong following China’s imposition of its new national security law on the semi-autonomous city.

Incidentally, U.S. tech firms are no strangers to governments demands regarding user data and content and they have generally complied with local laws. They have often used a technique known as “geo-blocking” to restrict content in a particular country without removing it altogether. However, China’s draconian law ups the ante, which means they can no longer get by, by adopting such measures.

According to analysts, Chinese authorities will no longer need to get court orders before requesting assistance or information for user data. Requests for such data about overseas users will place these companies in a particularly tight spot.

“It’s a global law … if they comply with national security law in Hong Kong then there is the problem that they may violate laws in other countries,” said Francis Fong Po-kiu, honorary president of Hong Kong’s Information Technology Federation.

A lobsided tale

China has blocked the services of most tech companies in the country and has used its own tech tools to spread its messages, including propaganda in the rest of the world. U.S. social media services are blocked in mainland China, but they operated freely in Hong Kong. Other diverse and rich content that used to flourish in Hong Kong will now be judged illegal.

Case in point: Netflix carries “Joshua: Teenager vs. Superpower”, a 2017 documentary on Joshua Wong, a democracy activist whose books were removed from Hong Kong public libraries last week.

“Ten Years”, a 2015 film that has been criticized by Chinese state media for portraying a dystopian future Hong Kong under Chinese Communist Party control, is also available on its platform.

Netflix declined comment.

There are many videos on YouTube which are critical of the Chinese leadership, including those of New York-based Hong Kong tycoon Guo Wengui, who has regularly voiced support for Hong Kong in his videos.

Google did not immediately respond to requests for comment.

None of these companies have said, how they will handle demand to hand over user data from Hong Kong or block and/or remove content.

U.S. tech companies are facing a risk of being caught in a crossfire.

“The foreign content players have to rethink what they display in Hong Kong,” said Duncan Clark, chairman at consultancy BDA China.

“The downside is very big if they get U.S. senators on their backs for accommodating. Any move they make will be heavily scrutinized.”

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